Watch the Video
With less than two weeks until Christmas, the retail calendar is effectively at its peak. For most retailers, the heavy lifting is done in the days right before this window closes. What matters now is who captured the bulk of discretionary spending as consumers became more selective.
Why Walmart owns the center of US retail
Lee and I quickly agreed that Walmart is dominating the moment. I said flat out that I love Walmart, and recent quarters back that up. The company has positioned itself squarely at the center of US retail, serving not just middle-income households but increasingly upper-income shoppers as well. Management has repeatedly pointed out that affordability is pulling customers who historically shopped elsewhere into Walmart parking lots.
Lee confirmed what many investors are seeing anecdotally. Walmart parking lots no longer reflect just budget-conscious shoppers. You now see higher-end vehicles alongside the traditional mix. Walmart’s leverage with suppliers allows it to hold pricing at levels competitors simply cannot match. In an environment where prices remain elevated, that advantage becomes decisive. I said plainly that the current quarter should be a home run for Walmart, and Lee agreed without hesitation.
Target’s credibility problem
The contrast with Target could not be sharper. I explained why I am short Target and have been for some time. The stock is already down sharply, yet the underlying issues remain unresolved. What frustrates investors is not just the problems themselves, but how management frames them. Quarter after quarter, leadership describes a series of small issues instead of clearly identifying major problems and demonstrating how they are being fixed.
I called Target an excuse company, one that continually points to theft, macro pressures, or temporary disruptions rather than structural missteps. The leadership reshuffle only adds to the concern. Moving the CEO into an executive chairman role while promoting the COO suggests continuity rather than change. From an investor’s perspective, that looks like the same thinking recycled at the top.
A clear retail pairs trade
Lee clarified the trade in simple terms. This is a classic retail pairs trade. Long Walmart and short Target. Had investors put that trade on six months ago, it would already be deeply profitable. I reiterated that view and said Target likely still has downside ahead, particularly as Walmart continues to consolidate share during critical shopping periods.
Scale wins in smaller markets too
Lee added useful color from his own market. Even in smaller towns, Walmart dominates traffic and convenience. In places like Tupelo, where multiple Walmart locations serve a much larger surrounding population, the company benefits from scale that competitors struggle to replicate. When a new Target opens near an established Walmart and Sam’s Club, the competitive imbalance becomes obvious almost immediately.
Looking ahead
We wrapped up by agreeing that Walmart’s positioning is not just a holiday phenomenon. It reflects a longer-term shift in consumer behavior toward value, scale, and reliability. Target, by contrast, appears stuck defending past strategies while Walmart continues to execute. For investors, the takeaway is straightforward. Walmart looks like a durable winner in this retail cycle, while Target remains a company searching for answers.
Transcript:
[00:00:04] Doug McIntyre: Lee, we’ve got, two weeks, actually 13 days until Christmas, so Right. For most retailers in the next day or two, they’re going to, they’re gonna peak. It’s been running up and then the only people shopping a week from now are gonna be people who were late or they, forgot to get something for their wife or father or something.
[00:00:24] And I’ll, tell you what, I love Walmart. I love Walmart. If you look at the last couple quarters, they have positioned themselves. They are right in the heart of US retail, they are in the heart because mid the middle class and even the upper class people because of what we call affordability over at the White House, and, this was said on the last earnings call, those people are now in the parking lots of Walmart.
[00:00:55] Okay?
[00:00:55] Lee Jackson: They are absolutely, they are. you’re looking at a guy that was there yesterday.
[00:01:00] Doug McIntyre: Yeah. It’s, not all Dodges and Jeeps out in that parking lot. Now you’re starting to see some Mercedes and BMWs. Absolutely, and it’s, look, Walmart has great stuff, period. I go to Walmart. There’s, it’s really the, our whole value idea is true.
[00:01:16] It’s not just, well, we say that in our ads.
[00:01:21] Lee Jackson: No, everything’s cheaper there. Everything is cheaper there.
[00:01:25] Doug McIntyre: Prices are going up. People are gonna go to Walmart because Walmart has enough leverage with suppliers among other things. Yep. To at least keep prices at a relatively good point. I think that the quarter we’re in now is gonna be a home run quarter for Walmart.
[00:01:41] Lee Jackson: Oh, absolutely. I couldn’t agree more.
[00:01:44] Doug McIntyre: Now I have a short, Target. Target stock I think is down, 43% in the last, it’s already down big and here’s the thing that I don’t like about companies that have trouble. When the CEO quarter after quarter talks about little trouble, well, we had a little trouble and we looked, I want a CEO to say we had two big problems and we fixed them, or they’ll be fixed in a quarter.
[00:02:14] The people at Target are all knuckleheads. It’s like, well, they’re in Minnesota. I know, we, Yeah, we had a lot of theft, a lot of shop lifting. It’s Target to me is one of the great excuse companies in The United States. I don’t like Walmart at all. I, if I owned, I would short Walmart right now if I were, in the shorting frame of mind.
[00:02:41] I think that’s a stock that keeps going down, the CEO who wrecked the place is now becoming executive short Target, not Walmart. Sorry, I was sorry. I would
[00:02:50] Lee Jackson: on your, let’s just be clear for our viewers, the, Doug pairs trade is a retail pairs trade where your long Walmart, you’re short Target, correct?
[00:03:01] Doug McIntyre: I am Long Walmart, and I am short Target.
[00:03:05] Lee Jackson: I think that’s pretty good, And had you put it on about six months ago, you’d already be so far in the money, you’d be closing that bad boy.
[00:03:14] Doug McIntyre: I know, But, Target is an excuse company and, I don’t like it the CEO is becoming the executive chairman.
[00:03:23] The COO is becoming the CEO. So what you have is you have a bunch of knuckleheads coming up through the ranks to become the top knuckleheads.
[00:03:32] Lee Jackson: Yeah, and it’s interesting because a lot of the people that are regional managers, and I mean they came through the Walmart system as well, and a lot of ’em started as associates and they spent 40 years there. But I mean, you, see it when I go into the, I mean, Tupelo, where I live is a small town. It’s not that big. And there’s three Walmarts here, in a town of about 45,000. But there’s this circle population of probably quarter million, that’s within 20 minutes.
[00:04:02] And they all come here, but they’re building. I think I told you this before, right down from the Walmart and the Sam’s literally right down the road, less than a mile away, they are building a Target.
[00:04:15] Doug McIntyre: Yeah. So you can go in there and watch ’em get slaughtered.
[00:04:20] Lee Jackson: I guess you can. So I think that’s a good idea.
[00:04:24] Now remember, to all of you who don’t short stocks, you’ll have to ask your broker or call Fidelity or Schwabb or whoever you deal with it. But you know, if, you’ll certainly be good on the Walmart side. I couldn’t agree more, and I think the Target probably still does have more downside.
[00:04:40] Doug McIntyre: Yeah.
Top Gaining Stocks
Top Losing Stocks